Congress trying to set pricing on TV ads

In a boot-to-the-face of an industry that has suffered mightily over the past 20 years, congress is working on legislation that would mandate advertising rates for political ads. (story here) Political ads, even in off year election cycles generate huge revenues for local broadcasters. For some of them it can add up to almost 50% of their total commercial income.

Television station owners are mobilizing against a new Democratic campaign finance bill that would force them to slash prices for many political advertisements.

The National Association of Broadcasters confirmed late last week that it will oppose provisions of the DISCLOSE Act, an attempt by House and Senate Democrats — and a handful of House Republicans — to roll back elements of the Supreme Court’s decision in Citizens United v. Federal Election Commission.

The high court’s decision tossed out most restrictions on political ad buys on television by corporations, trade associations and nonprofit groups.

The bill would require television, cable and radio outlets to offer the Republican National Committee, the Democratic National Committee and other political party committees the same deeply discounted price — the “lowest unit rate,” in industry jargon — that television stations are now required to offer only to political candidates. Although advertising rates fluctuate dramatically, veteran media buyers estimate that candidates’ campaigns often pay two-thirds of the retail price that regular television advertisers such as McDonald’s and Coca-Cola pay.

This will put a big hurt on TV station revenues – especially those small market stations that are already struggling to survive. Political parties have huge pools of money to spend on advertising. They can afford to pay prevailing rates.